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    "title": "Press Conference of Henry A. Kissinger, Secretary of State, and William E. Simon, Secretary of the Treasury, aboard Air Force One",
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    "ocrText": "Digitized from Box 18 of the White House Press Releases at the Gerald R. Ford Presidential Library\nFOR IMMEDIATE RELEASE\nNOVEMBER 17, 1975'\nOFFICE OF THE WHITE HOUSE PRESS SECRETARY\nTHE WHITE HOUSE\nPRESS CONFERENCE\nOF\nHENRY A. KISSINGER\nSECRETARY OF STATE\nAND\nWILLIAM E. SIMON\nSECRETARY OF THE TREASURY\nABOARD AIR FORCE ONE\nSECRETARY KISSINGER: The overall purpose of the\nmeeting was to bring together the leaders of the industrial\ndemocracies at a time when their economies were in various\nstates of recession.\nWhen it was proposed, it was suggested that these\nleaders ought to meet to give confidence to their peoples\nand to convey to their peoples the sense that they were in\ncontrol of their future and were not simply waiting for\nblind forces to play themselves out.\nSo we thought it was a matter of great importance,\none, because for two years we have been maintaining that\nthe political and economic cohesion of the industrial demo-\ncracies was central to the structure of the non-Communist\nworld; secondly, because we believed that the interdependence\nof these economies makes isolated solutions impossible;\nand, thirdly, because we believed that there were a number\nof concrete issues on which work had to begin and in which\ncommon action was important.\nWe spent a great amount of effort within our\nGovernment to prepare for this meeting and there are always\nmany stories when there are disagreements in the Government,\nbut this has been an unusual occasion, an unusual way in which\nall the departments working together worked out common\npositions, common philosophies, and achieved the basic proposals\nthat were put before the other leaders.\nWhen this conference was called, I think it is\nsafe to say that some of our friends wanted to use it as an\noccasion to blame us or at least to imply that their\neconomic difficulties could be solved primarily by American\nefforts, and others may have had the idea that especially in\nthe monetary field it could be used to bring about rapid\nsolutions in which the heads of Government overruled the long\nnegotiations that had gone on.\nMORE\n- 2 -\nBut as the preparation developed, I think a more\nsober spirit grew also and one of our themes was that\neconomic recovery was meaningless if it started another\nspurt of inflation and that what we had to aim for was\nstable growth.\nThe second theme we had to get across is that the\nAmerican economy was doing well and that, therefore, the\nconcerns of other countries that our recovery was too slow\nfor their own was unjustified.\nThirdly, we had a number of areas, specific ideas,\non how the interdependence of these countries could be carried\nout in the field of trade, in the field of economic relations\nwith the Socialist countries, in the field of monetary affairs,\nin the field of energy and in the field of development.\nThe discussions took place in a really unusually\nharmonious spirit. The fears which some of us had that the\nothers would bring pressure on us to accelerate what we\nthink is a well-conceived economic program proved unfounded,\nand after the President made his extensive intervention of\nthe first day, explaining our economic program, the other\ncountries substantially accepted this and indeed seemed to\nbe appreciative of it.\nI think this was a very important event because it\nmeant that they had more confidence that in looking ahead to\ntheir own future they could count on steady growth in the\nUnited States, and since everybody agreed that a substantial\npercentage of the recession was psychological, I had the sense\nthat a consensus emerged that this confidence that developed\nin our ability to handle the economic problems was a very\nmajor factor.\nIn fact, the confidence of the leaders in this\nprocess was shown by the fact that they would talk about\ngeneral principles and then turned over the drafting to\neither Ministers or experts and that the leaders only spent\nabout an hour on the declaration.\nAt first we didn't want any declaration because we\nwere afraid that we would spend our whole time drafting it\nand it didn't turn out that way, and that was important.\nIn the field of trade, there was an agreement first\nthat the negotiations on the multilateral trade negotiations\nshould be completed next year. Secondly, a commitment by\nall of the countries there to bring about a substantial\nreduction of trade barriers, including in the agricultural\nfield, and no attempt to hide behind community mandates or\nother obstacles.\nMORE\n- 3 -\nThere was also an agreement to accelerate or to\nfoster negotiations concerning export credits. Bill will\ntalk about the agreements in the monetary field which put\nan end to a debate of years about the nature of the floating\nsystem and the relation between floating and stability which\nshould end in January in an agreement that should at least\nput the field of international finance on a more stable basis\nthan it has been in a long time.\nIn the field of energy, there has been an agreement\nto cooperate closely or actively on the alternative sources\nand on conservation, and I believe this will show up in the\nprogram of the International Energy Agency which is in the\nprocess of being negotiated, and which we hope to conclude\nby December 15.\nIn the field of development, we identified the balance\nof payments deficits of the developing countries or their\ncurrent account deficits as one of the major problems on\nwhich we would work jointly, but we also pointed out that\nthere is a close relationship between that and the action\nthat is taken with respect to oil prices. So we believe\nthat the consuming countries are in an excellent position for\nthe beginning of the talks on international economic\ncooperation that are beginning in the middle of December.\nAnd we agreed to work together in all existing institutions.\nTo sum up, this unusual meeting of the heads of\nGovernment of the countries that between them produce 70\npercent of the world trade represented a commitment to the\nconception that our economic problems were long-term, that\nthere were no quick fixes to them, that they required a\nsteady cooperative effort, that their political relationship\naffected their economic relationship and that their economic\nrelationship in turn assisted their political cooperation.\nAnd so the free countries vindicated the concept\nof their interdependence and laid out a program and a method\nfor cooperation which we hope will accelerate the recovery\nof all of the peoples as well as their cooperation with the\nless-developed countries for the benefit of everybody.\nBut I think Bill ought to explain the monetary\nagreement because that is perhaps the single-most significant\nthing that happened there.\nSECRETARY SIMON: There is no doubt that it was a\nsignificant agreement reached between the French and the\nUnited States which,I believe and most everyone believes,\nis going to pave the way for agreement at the Interim Committee\non Overall Monetary Reform in January. I think that the\nagreements that we have reached are a fair and balanced\ncompromise. Neither side won nor neither side lost.\nMORE\n- 4 -\nEach has protected its very critical national\ninterests in a spirit of cooperation. We have sought to bring\na convergence of views and this is important. What we are\ntrying to do is build and expand on these areas of convergence,\nand as we succeed in doing this, the whole world community\nat large is going to benefit from this.\nNow I think that the disparity of views of the\npast few years between the French and the United States in\nparticular on various amendments to the articles of agreement\nhave obscured the deep mutuality of interest to return to\nstable economic and financial conditions in the world and\nmore orderly and stable exchange rates and that is very\nsignificant because this instability that we have had\ncontributed as well as resulted from tremendous institutional\nfinancial strains.\nAlso, the instability created great problems for\nmany of the countries in the world in taking care of the\nerratic price movements and setting economic policies and\nrestoring stable growth in their own economies.\nNow having said this, because one must look at the\nfundamental cause of the problem before we can begin to look\nfor any of the solutions, which is important, it has been\nclear that the French and the United States share some\nfundamental agreements on the monetary system, there is no\ndoubt about that. We both agree that the diversity of\nfinancial arrangements, the floating system, if you will,\nhas served us well under the present circumstances. It is\nactually necessary to take care of the stresses and the\nstrains that have been brought about by the severe inflation,\nrecession and, of course, the extraordinary oil : increase.\nSo having identified the causes, we then must set\nabout in curing the fundamental problems of this economic\ninstability and, therefore, the Communique, as it said, dealt\nwith two aspects of the monetary issue: one, the operational\nand, two, the reform of the system.\nOn the operational side we have reached an under-\nstanding that to achieve durable and meaningful stability\nin the underlying economic and financial conditions, we have\nto provide for mutually cooperative and conciliatory policies\namong ourselves, but that national domestic economic policies\nmust indeed be compatible. The world economy has suffered\nfrom all of the ills that I have spoken about and the under-\nlying problem remains with the severe inflation and, of\ncourse, the recession which was caused by this inflation.\nOn exchange markets,we are going to deal with\nerratic movements in exchange rates which, of course, create,\nagain, an instability. Erratic movements can be defined as\nmovements that have no underlying economic reason. Ours is\nnot an attempt to peg any of the currency rates at artificial\nlevels, but there are erratic movements in financial markets\non occasion that are notdirectly attributable to fundamental\neconomic events, and at this point intervention policies will\nbecome mutually cooperative and compatible to smooth out\nthese unstable periods.\nMORE\n- 5 -\nI\nHow is that stability going to be brought about?\nThat is,how is this operation going to work?\nSECRETARY SIMON: Well, in two ways. One, I think\na session that was heavily devoted, as Secretary Kissinger\nsaid, to the economic aspects of the world's problems today,\nthe needed policies -- cooperative as well as individual --\nthat are required for a return to stable economic and\nfinancial conditions are at the foundation of the answer to\nyour question.\nAs far as the consultations and the mechanisms\nthat are going to be established for smoothing out, there is\ngoing to be greatly expanded consultative mechanisms throughout\nthe world done on a more orderly basis, on a more daily\nbasis, if you will, by both the central banks, of course,\nwho do this today, as well as the deputies to the Finance\nMinisters and the Finance Ministers themselves.\nThere will be more constructive meetings of the\nFinance Ministers to deal specifically with this issue.\nI\nWill there be a standing committee of some\nkind to advise intervention at a given point?\nSECRETARY SIMON: No, the make-up of this committee\nhas not beenset yet but we have many standing committees.\nWe have the Interim Committee, which is the old group of\n20 and the group of 10 which will meet and direct itself\nright to this issue in December in Paris.\n2\nThe mechanism has not been set up yet, I mean\nthe mechanism has not been designed as to how this consultative\nprocess will go forward?\nSECRETARY SIMON: The mechanism has been designed\nin the Memorandum of Understanding that the French and the\nUnited States initialed today and that the other Ministers\nwho attended this session and were briefed fully on this are\nin general agreement, but until we bring all of the interested\nand affected parties together, we cannot say that this is going\nto be totally acceptable, although I believe it will be.\nSECRETARY KISSINGER: It is safe to say that there\nwill be a much expanded discussion or consultation among the\nFinance Ministers and their deputies as a result of this.\nQ\nMr. Secretary, as long as we have still got\nsome video tape left, let me ask you in realistic terms\nwhat you think this conference means to the average\nAmerican. Does it mean more jobs or lower prices, and if so,\nhow?\nMORE\n- 6 -\nSECRETARY KISSINGER: Well, if this conference\ncontributes to an acceleration of economic recovery world-\nwide, which it is intended to do; if it contributes to a\nlowering of trade barriers, as it is intended to do; and to\ngreater financial stability, then it will mean more jobs,\nperhaps lower prices, better control over inflation and a\ndegree of cooperation among the industrialized nations, that\nwill benefit every American.\nQ\nWhen is this millennium going to come about?\nHow fast will this process take effect?\nSECRETARY KISSINGER: We have made clear that it is\na long-term process and we are not ever going to be able to\nsay that on the next day a dramatic change occurred, but\nI think that the hopeful processes that are already going\non car. be accelerated by the results that occurred here.\nThe major theme of this meeting was that we have got a\nlong-term problem, that we are not trying to make quick\nfixes but that we can get a stable, steady growth on the\nlong-term basis.\nQ This mechanism that you speak of and that you\ncan't tell us about, does it have to do with the Federal\nReserve Board and the central banks?\nSECRETARY SIMON: Certainly the central banks are\nthe intervention mechanism and will continue to be, yes,\nbut it is also going to involve, as it always has, the\nFinance Ministers of the various countries, but a formal\nmechanism of where the deputies will also be used in this\nformal consultative process and the consultative process is going\nto be broader than it ever was before, bringing in more nations,\nmore affected, interested nations into the process.\nQ Mr. Secretary, early this year the dollar had\nquite a plunge. Had this system you envisage been in effect\nthen, would the dollar have plunged in relation to other\ncurrencies the way it did?\nSECRETARY SIMON: Well, our dollar declined, as\nit often does, in response to several factors: one, an\noutlook for lower interest rates which is a fundamental\nfactor in a country always, and, of course, the New York City\nproblem and the fears of some potential international problem\nrelated to it as well. I would consider factors like this of\na temporary nature and not of a fundamental nature.\nQ\nSpeaking of New York City, what did you tell\nthe European leaders about President Ford's --\nSECRETARY SIMON: I was not asked by any of my\ncounterparts. I asked them questions as to what they thought\nif indeed they had any reason to believe there would be a\nproblem that I had not thought of before and basically\nbriefed them on the whole situation because I felt that they\nwere interested, which indeed they were, but they didn't\ncite any significant problem.\nMORE\n- 7 -\n2\nDid they seem to be somewhat reassured by\nthe presentation that you and the President made on the\nproblem of New York City?\nSECRETARY SIMON: Well, as I spoke to them, they\nseemed to be reassured that the situation was indeed well\nin hand at this point.\nQ\nYou believe it is well in hand then?\nSECRETARY SIMON: Well, I have been away for several\ndays, as you know, so I have to wait and get back. I still\nhave not seen the total agreement and been able to study it.\nI have been too busy doing what I have been doing.\n0 Do you think that the Federal Government\nis going to have to do anything to guarantee the short-term\nbond roll-over problem?\nSECRETARY SINON: I don't think that anything that\ncomes under the heading of a bail out as far as the present\nbondholders are concerned or the note holders is in the\ncards, no. But then, again, the City-State program that has\nbeen put up restructures and restructures all the notes that\nare held so that would not be required.\nYou know, you asked Henry a question about the\nprocess we went through here at the economic summit and it\nreminded me of the perhaps overused word these days of\ninterdependence, and it was brought up and very forcefully\nbrought up in this meeting that the world communities\nindivisible, recognizing that national economic policies are\ncertainly important, yes, but today this inter-relationship\nin the world communities and in the economic and financial\narea in particular must be better understood by each of\nus. Our policies must be mutually supportive where indeed\nthey are compatible and meetings like this bring about better\nunderstanding of what our policies are in the United States\nand indeed what the policies are in the European community\nand in Japan and these are major, these are significant steps\nto agreeing about the permanent durable prosperity that we\nwish to provide for all of our peoples.\nMORE\n- 8 -\nSECRETARY KISSINGER: A good example is that at all\nof our previous meetings this year with European leaders, as\nI said earlier, there was an undertone that we were not doing\nenough. I think that after our presentation on Saturday that\ntopic never emerged again and everyone was more discussing\nhow we could support each other's efforts.\nQ What is the compromise since I understand that\nthe central bank has been intervening on the floating dollar?\nI mean what compromise did we actually make? Is it on the\nbasis of his consultation?\nSECRETARY SIMON: Yes, indeed. You know there is a\ndanger and there are those -- of course one never knows how\npeople view agreements but there are those who believe that\ndesigned intervention policies mean a zone or a ban or\nfixed rates of some kind and that is not the case, but it is\ngoing to be a formal mechanism that is aimed not at setting\nany currency at an artificial rate that would contravene the\nmarket forces but one that moves in erratic fashion not\nrelated to underlying economic activity.\nQ Mr. Secretary, Mr. Cormier has asked you before\nabout what would have happened back in the spring of this year\nwhen the dollar first declined and then recovered under this\nnew mechanism. Would those swings have been reduced?\nSECRETARY SIMON: I think it is difficult at this\npoint for me to recall any way, Paul, all of the conditions\nthat were extant at that time and suggest what would have\noccured as far as this consultation method because this is\nnot only the United States that is going to be reporting and\ngiving their judgments on the market conditions but all of\nthe countries involved in this process.\nQ\nSo this would be a process much like the open\nmarket committee of the Federal Reserve when it determines\nhow to intervene in U.S. monetary markets; that is, they\ntake an ad hoc view of the economy and make some judgments\nin private?\nSECRETARY SIMON: No, I would not say there is\nanything ad hoc about this operation at all. As a matter of\nfact, it is designed so it will not be ad hoc in nature,\nthat it is going to be daily monitoring of all of these\nmarkets with an exchange of information that is going to give\nthe officials in the United States a greater fundamental\nknowledge about what is going on in all of the currencies of\nthe world.\nMORE\n- 9 -\nQ\nThere will be no automatic criteria for\ndecision?\nSECRETARY SIMON: No, absolutely not. That will be\ndone on the judgments of the Finance Ministers and the\ncentral bankers, the ultimate judges of this issue, of the\nfundamental aspects of the issue at that time.\nQ Okay. Will they take a vote and the vote will\nbe binding or will each country retain sovereignty?\nSECRETARY SIMON: No, no, no. There is no vote or\nbinding in these areas whatsoever. That would really be\nimpossible and indeed unfair and unworkable. This will be\ndone just the way that the central bank and ourselves and\nthe Treasury decide there should be intervention now. We\nwork together and we usually can agree when indeed it is needed,\n0 But if the U.S. Government, for example, does\nnot believe it is appropriate to intervene, it believes that\nfundamental forces are at work and let us say the French\nGovernment or some combination of other Governments believes\nthat these are erratic fluctuations, then there is a\nstand-off and the United States would not intervene?\nSECRETARY SIMON: If that occasion arose, you are\ncorrect, we would not intervene.\nΩ What response did you find to your offer --\nthe U.S. offer -- for other countries to invest in our\nenergy projects, including OPEC?\nSECRETARY SIMON: Well, I think it is too early to\ntell.\nHenry.\nSECRETARY KISSINGER: Well, I think the other leaders\nconsidered that one of the most interesting parts of the\nPresident's presentation and they asked a number of questions\nabout how it would work and what we had in mind, and I\nwould say that they all agreed that that was one of the\nmost significant proposals, but it has to be worked out by\nexperts.\nQ\nYou met with Mr. Callahan during the sessions\nand did you discuss the problem of seating at the energy\nmeeting in December?\nSECRETARY KISSINGER: I also met with Sauvagnargues.\nYou mean membership or seating?\nMORE\n- 10 -\nQ\nMembership.\nSECRETARY KISSINGER: Only in the most general way.\nMr. Callahan explained his point of view to me. As for that\nmatter Sauvagnargues did explain his opposite point of\nview to me. Our position is that this is primarily a\nmatter between the United Kingdom and the European community\nin which the United States will not play a principal role.\nQ\nDo you see this causing any problem with the\nstarting of that meeting or do you see a solution?\nSECRETARY KISSINGER: A number of compromise solutions\nhave been proposed. I don't want to put any one of them\nforward. There is going to be a European summit on December 2\nand we hope that it will be worked out on that occasion.\nQ Has there been any discussion on nuclear non-\nproliferation of the peaceful plans?\nSECRETARY KISSINGER: Not as such, no.\nQ\nMr. Secretary, on the basis of your Pittsburgh\nspeech and some other indications, I think some of us have\nthe idea that the American delegation went to Rambouillet\nhoping that out of this would evolve some continuing machinery\nfor consultation and the Communique speaks only of using the\nexisting machinery. Did we abandon some idea here?\nSECRETARY KISSINGER: You have the machinery that\nwas set up under the monetary arrangements in which the\nFinance Ministers will be in almost daily contact and there\nare many other organizations. There was an agreement that\nthe Governments concerned would work cooperatively on all of\nthese problems and so there was no formal machinery set up\nexcept the one that grows out of the monetary group and\nsince the monetary arrangement is exactly the group we\nenvisage to begin with, there wasn't any sense of setting up\nanother one with a different hat.\n2 Was there any talk about another meeting of this\nsort a year from now?\nSECRETARY KISSINGER: Yes, there was talk of another\nmeeting and the leaders will stay in touch with each other\ndepending on conditions. If the conditions get critical,\nthey will meet earlier. If conditions take the form that .\nare now predicted, then they will meet some time during the\ncourse of the next year -- within a year, roughly.\nMORE\n- 11 -\nQ\nCould you gentlemen tell us what role Mr. Shultz\nand Dr. Burns played in the monetary agreement? We were told\nthere were two months of negotiations behind the scenes on this\npoint and they made a promise.\nSECRETARY SIMON: Arthur Burns plays a very active role.\nArthur attends all of the interim committee meetings with me,\nthe G-10 meetings and the G-5 meetings that we hold so he is\nobviously actively involved in the mechanism, both in setting our\npolicy back in the United States as well as in negotiations that\nI conduct. But Arthur is always, as I say, with me as far as --\nQ He is?\nSECRETARY SIMON: Of course he is. Yes, indeed.\nQ\nWhat about Shultz?\nSECRETARY SIMON: Well, as you remember George Shultz,\nI took over from George so this is a continuation really of the\nnegotiations that George carried on when he was Secretary of\nState but other than the preparations of the meeting with the\nprivate citizen group that George Shultz worked on, he had no\nactive area of involvement in the negotiations on the monetary --\nSECRETARY KISSINGER: But he was never Secretary of\nState. (Laughter)\nSECRETARY SIMON: That is a freudian slip.\nQ\nHe had no contacts with his former Finance\nMinister colleagues who are now heads of state?\nSECRETARY SIMON: Sure, George is very close on a personal\nbasis to both Chancellor Schmidt and President d-Estaing and\nhe sees them and talks to them frequently.\nQ\nDid he talk to them as part of this meeting?\nSECRETARY SIMON: I doubt --\nSECRETARY KISSINGER: I think the correct explanation --\nthere was a group of private experts connected with their\nGovernments that meet actually less on the monetary question\nthan on the other issues. The reason we did it on that basis\nwas because one didn't want to bring the heads of Government\ntogether if there was not some sense that something significant\nwould be achieved. So we designated George Shultz to attend\nthese informal meetings that gave us a sense where the other\nGovernments were going. I repeat, the monetary matters were\nreally negotiated primarily by the Treasury Department and\nby Ed Yeo, but the other issues were in a preliminary way\nexplored by a group which George Shultz attended in a private\ncapacity but still in close touch with Bill and myself and\nthe President.\nMORE\n- 12 -\nQ\nBut did he meet or talk with Mr. Giscard and --\nSECRETARY KISSINGER: The process went like this.\nThe idea of this summit came up first in a vague way at a\nmeeting that I had with Giscard in May. It was then put\nforward in a more formal way at Helsinki by Giscard to the\nPresident. At that point we decided that we would send\nsomebody around, not quite an official, to give us his judg-\nment of whether it would be worthwhile and George Shultz\nwent around to see Giscard, Schmidt, Wilson, and reported to us\nafterwards that he thought there was a good basis for a summit\nand only after we had that report did we make the decision to\ngo ahead.\nWe wanted to avoid a situation in which the summit\nwould deal with only one problem, say, exchange rates, and only\na set of demands made on the United States by the others and\nwhen George Shultz was reassured by that, then the President\ndecided to go ahead and removed it into formal governmental\nchannels.\nTHE PRESS: Thank you.\nEND"
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